CEQ's New Guidance on NEPA Reviews for Clean Energy Projects

The Council on Environmental Quality (CEQ) earlier this year published its updated “Guidance on Consideration of Greenhouse Gas Emissions and Climate Change,” a document for the assessment and disclosure of climate impacts related to federal agency environmental reviews conducted pursuant to the National Environmental Policy Act (NEPA). The NEPA review focus is federal agency permitting for clean energy and other infrastructure projects. It is theoretically designed to provide more clarity and predictability for agency reviews.

Although federal agencies are the authors of an environmental impact statement (EIS), environmental analysis (EA), and NEPA-related decision documents, project proponents provide the underlying environmental monitoring and other data that goes into the agency process. This new guidance provides a detailed, and more expansive, roadmap to help project proponents gather that data.

Other than the statutory authority to promulgate system-wide NEPA-related rules, the CEQ has no agency-specific rulemaking authority. The guidance is not a rule or regulation and does not apply to any particular project. Rather, it outlines what agencies (and thus project proponents) should be analyzing in terms of greenhouse gas (GHG) emissions and climate-resilient design issues under the respective agency’s substantive purview. As such, the guidance is designed to supplement CEQ’s rules implementing NEPA.

Social Costs and Net Zero

The guidance in part addresses the appropriate use of an estimate of the social cost of GHGs to disclose climate impacts. Focusing on the Biden administration’s goal of reaching “net-zero” carbon emissions by 2050, the CEQ provides specific recommendations for renewable and low-GHG projects that are designed to keep agency reviews more focused, and to make projects more climate-smart and resilient. The guidance replaces the 2016 emissions guidance that had been withdrawn by the Trump administration. It specifically:

■ Updates the 2016 guidance considering science, case law, and the climate crisis.

■ Emphasizes a “rule of reason” suggesting that the depth of the agency analysis should be proportional to a project’s impacts. It clarifies that projects that will reduce GHG emissions can have less-detailed GHG emissions analysis.

■ Clarifies best practices including the need to quantify indirect emissions, ostensibly to help projects avoid legal setbacks and provide better transparency.

■ Recommends best practices for communicating climate impacts, such as by noting relevant climate action commitments and goals, and using the social cost of GHGs to generate monetary estimates of climate impacts.

■ Recommends that agencies mitigate GHG emissions to the greatest extent possible.

■ Advances environmental justice by encouraging agencies to meaningfully engage with affected communities and address environmental justice considerations.

■ Supports broad scale or programmatic approaches that can make later reviews more efficient.

Consistent with CEQ’s NEPA implementing regulations, the guidance tries to ensure that agencies evaluate reasonable alternatives and mitigation measures that could avoid or reduce potential climate change-related effects. Thus, NEPA reviews should quantify proposed actions’ GHG emissions; place GHG emissions in the appropriate context and disclose relevant GHG emissions and relevant climate impacts; and identify alternatives and mitigation measures to avoid or reduce GHG emissions.

Direct, Indirect, and Cumulative Effects

NEPA requires agencies to consider the reasonably foreseeable direct and indirect effects of their proposed actions, and in addition to the no-action alternative, to focus on reasonable alternatives. The term “direct effects” refers to reasonably foreseeable effects that occur at the same time and place. The term “indirect effects” refers to effects that are later in time or farther removed in distance but that are still “reasonably foreseeable.”

“Cumulative effects” result from incremental effects when added to the effects of other past, present, and reasonably foreseeable actions regardless of what agency (federal or non-federal) or person undertakes the actions. Thus, an agency will consider the proposed action in the context of the emissions from past, present, and reasonably foreseeable actions.

The CEQ references the environmental justice strategies required by Executive Orders 12898 (Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations) executed by President Clinton in 1994, and 14008 (Tackling the Climate Crisis at Home and Abroad) executed by President Biden in 2021. Federal agencies will identify any communities impacted by the proposed action and consider how impacts could amplify climate change-related hazards such as storm surge, heat waves, drought, flooding, and sea level change.

The CEQ also references Executive Order 13985 (Advancing Racial Equity and Support for Underserved Communities Through the Federal Government) executed by President Biden in 2021, which calls for advancing equity for underserved populations including rural communities and persons with disabilities. Project proponents will be hand-in-glove with agencies as they engage with affected communities and consider the effects of climate change on vulnerable communities in designing the action or selection of alternatives.

The CEQ guidance has enjoyed a tortured history of variations from administration to administration, but for the foreseeable future, this guidance forces proponents to consider a broader range of “reasonable” alternatives and emphasizes the “social costs” of a project and its cumulative impacts.

—John L. Watson ([email protected]) is of counsel with Spencer Fane LLP.